BP80 Fixed Assets V 10doc
BP80 Fixed Assets V 10doc
BP80 Fixed Assets V 10doc
Author
: Ram Ganesh
Creation Date
: 26 Sep 2008
Last Updated
: 29-Sep-2008
Document Ref
: ABRL-BP080-FA
Version
: 1.0
Approvals:
Name and Designation
Signature
FA_BP080_NLL
5 May 2008
Document Control
Change Record
Date
Author
Version
Change Reference
Reviewers
Name
Position
Shalini Pal
Distribution
Copy
No.
Name
Location
Note to Holders:
If you receive an electronic copy of this document and you print this out,
you should write your name on the front cover (for document control
purposes).
If you receive a hard copy of this document, please write your name on the
front cover (for document control purposes)
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Contents
Document Control........................................................................................ii
Introduction.................................................................................................4
About Company.....................................................................................4
Document Scope and Assumptions........................................................4
ABRL HO Finance...................................................................................4
Key Issues Highlighted /Observed.........................................................5
Key Business Process Improvement.......................................................5
Legend......................................................................................................... 6
Fixed Assets Process....................................................................................8
Event Catalog for Fixed Assets....................................................................9
Process Descriptions for Fixed Assets........................................................10
Fixed Assets Future Process Flow in Application........................................12
ABRL Future Business Process Flow.....................................................13
FA-P001: Prepare Mass Additions........................................................13
FA-P002: Post Mass Additions..............................................................15
FA-P003: Manual Additions..................................................................18
FA-P004: Enter CIP Asset.....................................................................20
FA-P005: Asset Maintenance................................................................22
FA-P006: Adjustments - Financial and Other Asset Information..........24
FA-P007: Asset Retirement..................................................................26
FA-P008: Asset Transfer.......................................................................28
FA-P009: Manage Construction in Progress Assets..............................30
FA-P010: Depreciate Assets.................................................................32
FA-P011: Period Close Process.............................................................33
FA-P012: Create Journal Entries..........................................................36
Open and Closed Issues............................................................................38
Open Issues......................................................................................... 38
Closed Issues.......................................................................................38
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Introduction
About Company
ABRL Profile
Aditya Biral Retail Limited belongs to the USD 28 Billion Corporation that is in the league of fortune 500.
ABRL made its foray into retail market in 2006 by acquiring Trinethra, a retail chain of super markets in south
India and with over 170 Outlets. Spread across the four southern states of Tamilnadu, Karnataka, Andhra
Pradesh and Kerala respectively. In May 2007 ABRL launched its own Brand of retail stores More. More
Spread its wings in Super Markets and Hyper markets ranging from an area of 10000 Sq.Feet to 75000
Sq.feet, more. has till date around 100 Super Markets in locations across Pune, Vizag, Delhi, Bangalore &
Vijayawada.
ABRL HO Finance
The HO Accounts in ABRL is responsible for maintaining the Financial and Management accounts in the
company.
The Fixed assets processing activities of ABRL are currently performed using FAMS/Navision system. In ABRL
all Fixed Assets reports are performed manually using FAMS, an offline System
The Accounts Department matches Supplier Invoices with Receipts and then they manually record the items as
fixed assets in the System.
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The objective of this document is to recommend the High level Process model for the Fixed Assets functions in
ABRL. Future process model will be used as the basis for the Oracle Product mapping.
ABRL Proposes to maintain a single Corporate Book that will be associated with HO Ledger.
Integration is the key issue as many processes are performed manually (i.e. no
integration with other modules).
1.
2.
In ABRL Fixed
Spreadsheet.
3.
In ABRL, journal entries relating to Fixed Assets are passed in the General
Ledger manually.
4.
5.
ABRL Follows a Straight line Method of Depreciating Assets based on the rates
for the relevant assets/category of assets.
6.
In ABRL, Store opening date is the cutoff date for capitalizing the assets for
that Location
7.
8.
Assets
schedule
is
prepared
manually
using MS-Excel
Integration of the Fixed Assets process with the Purchase Order, Accounts
Payable, General Ledger processes.
2.
3.
4.
All journal entries related to the fixed assets will be automatically generated
and passed to Oracle General Ledger.
5.
6.
Capex Purchase orders, GRN, Invoicing and capitalization will be carried out in
ABRL HO Ledger and ABRL HO will be responsible for the maintenance of the
FA Book.
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Legend
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The Asset Register is referred to as an Asset Book i.e. Corporate Book in the Oracle Assets.
The journal of all the financial transactions of an Asset Book is done in the GL. Hence every asset book should
be associated with a GL.
Fixed Assets has three flex fields that assist in codification and classification of assets.
Depreciation Calendar
Depreciation calendar is the calendar, which the entire fixed assets use for the purpose of calculating
depreciation and subsequent accounting in the General Ledger module. It is a general practice to maintain the
same calendar for both the GL and the FA.
Depreciation Methods
Oracle Assets supports almost any depreciation method. The depreciation methods that can be used are Flat
rate, Table based, Calculated, Production based and Formula depreciation.
Different depreciation methods can be used for different categories based on ABRL requirements.
Transfer of Assets
Each asset can be assigned to a location and / or to an employee. Assets can be transferred
between locations or from one employee to another.
Running Depreciation
Depreciation can be run only at the book level and for a period at a time. Running depreciation for a period
automatically closes the current period and opens the next period for transactions. Fixed Assets can have only
one period open at any point in time.
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FA-E01
FA-E01
Create
Fixed
Create
AssetsFixed
Assets
FA-P001
Prepare Mass
Additions
FA-P002
Post Mass
Additions
FA-P003
Manually Add
Assets
FA-P004
Enter CIP
Assets
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FA-E02
FA-E02
Maintain
Fixed
Maintain
Assets Fixed
Assets
FA-P005
Maintain
Assets
FA-P006
Adjustment to
Financial
Information.
FA-E03
FA-E03
Depreciate
Depreciate
Fixed
Assets
Fixed Assets
FA-P010
Depreciate
Assets
FA-E04
FA-E04
Period
Close
Period
Close
Process
Process
FA-E05
FA-E05
Book
Book
Control
Control
FA-P011
FA-P011
Period
Close
Period
Close
Process
Process
FA-P013
Book
Control
FA-P012
Create Journal
Entries
FA-P007
Asset
Retirement
FA-P008
Asset Transfer
FA-P009
Manage CIP
Assets
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Name
Type
FA-E01
FA-E02
Internal
Internal
FA-E03
Internal
FA-E04
Internal
FA-E05
FA-E06
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Description
Frequency
As Required
As Required
Monthly
Internal
Period Close Process and Create journal entries relating to fixed assets e.g. depreciation
journals, disposals etc.
Creation of Corporate Book
Internal
Monthly
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Process Title
Description of Process
FA-P001
FA-E01
Invoices are matched against Purchase Orders, Goods Receipt Note. The invoice details are
then transferred from Oracle Payables to Oracle Assets.
FA-P002
FA-E01
The transferred invoice details (mass additions) are reviewed in Oracle Assets. Fixed Assets
will be created based on the invoice details transferred from Oracle Payables.
FA-P003
FA-E01
Manual Additions
There may be a requirement for some assets to be created directly in the Oracle Assets
module (i.e. not via the transfer of invoices from the Oracle Payables module). For such
cases, the assets are manually created as Fixed Assets.
FA-P004
FA-E01
Construction In Progress (CIP) assets have zero cost. They are not tracked as Fixed Assets
until construction is completed and they are placed in service. CIP assets can be created in
the system either from Mass Addition lines from Oracle Payables or Manual entry in Oracle
Assets.
FA-P005
FA-E02
Maintain Assets
Existing Assets are maintained in the Asset system in this process. The maintenance
performed includes adjustments to asset information, adjustment to depreciation,
adjustment to financial information, asset retirement, transfer of assets to different locations
and capitalizing CIP assets.
FA-P006
FA-E02
FA-P007
FA-E02
Asset Retirement
An asset that is no longer in service will be retired. For example assets that are lost,
damaged beyond repair, sold or returned will be retired by this process.
FA-P008
FA-E02
Asset Transfer
This process describes the transfer of existing assets between employees, depreciation
expense accounts and locations.
FA-P009
FA-E02
After CIP assets are first captured in Oracle Assets, they are built up over a period of time.
This process describes the maintenance of CIP assets. This includes adding, deleting or
changing invoice lines to the existing CIP asset, transferring invoice lines between existing
CIP assets, capitalizing CIP assets.
FA-P010
FA-E03
Depreciate Assets
Run the depreciation process to calculate depreciation amounts for all assets within a book
for a period. After the depreciation process is run, Oracle Assets automatically closes the
current period and opens the next period.
FA-P011
FA-P012
FA-E04
FA-E05
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During this process, additional information such as mass addition source, descriptive, and
depreciation information can be inputted into the Assets module.
Once the user has verified that the mass addition is ready to become an asset, the user
changes the mass addition queue to POST. Post Mass Additions function is then run and
this mass addition line will become an asset.
The Mass Additions post program defaults depreciation rules from the asset category,
book, and date placed in service. The user if necessary can override this information
manually.
Asset Categories
Oracle Assets uses the category Flex Field to group your assets by financial information. By
standardizing category names, it is easier to track the assets. By defaulting financial and
depreciation information from the asset book and asset category, the creation of assets
can be speeded up as less information needs to be manually entered during asset creation.
Further Asset Category Flex fields determines the account to which depreciation expense
will get generated.
Oracle Assets allows having a maximum number of 7 Segments for Asset Category
Flexfield.
For ABRL the Category will be created as
Major Category
Minor Category I
Minor Category - II
Asset Key
ABRL has a requirement to track assets by ---- (i.e. assets purchased in the particular
financial year). In ABRL the Asset Category will have only one Segment as Asset Key
This Flex field can be used to group assets without impacting the financial reports as
required by ABRL.
Asset Locations
ABRL will track the locations of all assets. ABRL Will have a Asset Location Flex field
structured on the pattern of Location Segments designed in the Accounting Flex field as
follows.
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Asset Number
ABRL will practice automatic numbering of assets.
Tagging
ABRL will tag its assets i.e. Tag labels containing the asset number and other necessary
information will be attached onto the assets.
These Tag Labels will facilitate users in identifying assets during stock taking exercises.
Tag Numbers has to be manually entered by the person who is creating the asset.
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Using Quick Additions, only a limited number of fields are captured for each asset. Most of
the information is also defaulted from the parameters assigned to the Asset Book and the
Asset Category. For example, the depreciation methods are defaulted from the Asset
Category.
The Detail Addition function is used to enter complex assets that the Quick Addition
process does not handle. This function allows more information to be captured about the
asset. Default information can also be changed. The information includes:
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Asset Description
Asset Category
Number of units making up the asset
Details of asset sub-components
Manufacturer and Model
Serial number
Property type and class (i.e. Owned/Leased and New/Used)
Purchasing information (e.g. Supplier name, PO number, Invoice
Number of Supplier)
Current cost, Accumulated Depreciation etc
Salvage value
Date placed in service
Indicate whether the asset will be depreciated (Oracle Assets can
track items that do not need to be depreciated e.g. expensed
items)
Override and change the depreciation and prorate methods which
were defaulted from the category.
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ABRL Proposes to capitalize all its CIP Assets as on the date on which a store is
opened in a location
Capitalize Assets in the Asset work bench facilitates the capitalization of assets
based on the client need on a asset to asset basis.
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Revaluation of assets
Adjustment to prior year depreciation
Adjustment to the assets financial information (e.g. asset
cost, depreciation method, prorate convention etc)
Asset retirement
Asset Transfer (to different locations, cost center etc)
Capitalize CIP assets that are completely constructed etc.
Change the Asset Category of Assets For More
information refer to Adjustments - Financial and Other
Asset Information
The process flows gives an overview of the various types of maintenance processes. Each
type of process will be elaborated in greater detail in subsequent flows.
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Asset cost
Salvage value
Prorate convention
Depreciation method
Life of the Asset if SLM
Capacity and unit of measure
Rate
If the asset is fully reserved, adjustments can be made to the same fields as for an asset
for which depreciation has been run. If the asset is fully retired, none of the fields can be
changed.
The user can choose whether to amortize or expense the adjustment made and Oracle
Assets passes the necessary journal entries for the same. Further these adjustments can
be identified after the current open period is closed.
Other Asset Information
Other asset information that can be changed includes:
Asset Description
Asset Category
Tag Number
Sub-components
Parent asset
Number of units
Other Asset details pertaining to manufacturer, warranty,
model etc.
As and when ABRL will change the Category of Assets, the applicable depreciation rates for
the category will automatically apply.
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Asset category
Asset key
Location
Employee
Asset number range
Date placed in service range
For assets with sub-components, the user can also elect to automatically retire the subcomponents along with the parent asset.
When performing a mass retirement, Oracle Assets automatically runs the Mass
Retirements Report and the Mass Retirements Exception Report. The user can review these
reports, perform a mass reinstatement, or adjust an individual retirement transaction if
necessary.
For individual retirements, the details of Proceeds of Sale and Cost of Removal (of the
asset) can be entered into the system. When Mass Retirements is used, the total proceeds
of sale and/or the total cost of removal amounts will be entered into the system. Oracle
Assets then prorates the total amounts over the assets being retired according to each
asset's current cost.
ABRL has a requirement to capture the capital gain on Disposal of Assets.
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Depreciation A/C
Credit
10
10
For Income Tax purpose, Depreciation on asset is calculated on the Written down Value for
the Block of Asset. 100% of depreciation is calculated if the asset is purchased between
1st April and 30th September and 50% of eligible depreciation if asset is purchased
between 1st October and 31st March.
For the above purposes date placed in Service is the date on which the assets are
capitalized and the Depreciation Calculations are done accordingly.
For calculating depreciation as per Income Tax Act, users need to manually run the
program Income Tax Act Fixed Asset Schedule
Please note that India-Income Tax Depreciation is only a report and no accounting entries
are passed in the system.
ABRL HO requires adjusting the cenvat recovery on Capital Goods at the applicable rates
for the assets.
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Asset Listing by Period: To track assets for a specified period for internal
management purposes.
Asset by Category Report: To find and review the entire asset in an asset
category.
Fully Reserved Assets Report: TO find the assets that became fully
depreciated in a range of accounting periods
Asset Addition Report: To find the detail of asset added in that period
Asset Retirement Report: To Find the retired asset for that period
Asset Transfer Report: To find the list of assets transferred from one
location, Employee to another.
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Issue
Resolution
Responsibility
Target
Date
Impact Date
Closed Issues
ID
Issue
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Resolution
Responsibility
Target
Date
Page
Impact Date
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